Telit founder fires off debt warning over tech firm's £305m takeover

Telit Communications founder writes to chairman with formal complaints about £305m takeover of business by private equity firm Dbay Advisors


The founder of Telit Communications has written to the company’s chairman to issue several formal complaints about the £305million takeover of the AIM-listed ‘internet of things’ business by private equity firm Dbay Advisors. 

City sources said Oozi Cats, who was chief executive of Telit until 2017, has sent a letter to Simon Duffy, the former vice chairman of Virgin Media Group. 

The formal complaint from Cats comes as the court sanctioned the Dbay Scheme of Arrangement to de-list the company. 

'Internet of things': Oozi Cats set up Telit 21 years ago and stands to make around £40million from the sale of the company to Dbay

‘Internet of things’: Oozi Cats set up Telit 21 years ago and stands to make around £40million from the sale of the company to Dbay

Cats set up Telit 21 years ago and stands to make around £40million from the sale of the company to Dbay as he still owns around 12 per cent of the business. 

However, the entrepreneur is said to be extremely unhappy with the way Telit’s board behaved during the sale process to Dbay and demanded the company reveals up-to-date financial figures.

Cats is also worried about what will happen to the company after it has been acquired by Dbay, suggesting Telit may have to take on a huge amount of loans from financial institutions to pay for Dbay’s short-term debt that is being used to take the company private. 

Dbay, which two years ago took control of Eddie Stobart Logistics, has been in talks about buying Telit since late last year. 

Eventually the Isle of Man-based firm agreed a deal with Telit’s board to pay 229.5p a share for the business, which values the company at around £305million. 

City sources said Switzerland’s u-blox, which had been competing with Dbay for Telit until January this year, made a last-minute takeover approach in July, valuing the company at around 260p a share in cash. 

It is not clear why the latest bid approach from u-blox, which previously offered 250p a share in cash and shares, was never disclosed to Telit investors. 

In 2017, Telit’s shares traded as high as 375p but collapsed to around 120p following a raft of allegations, some of which were made by investors who had shortsold the stock. 

The company was forced to find a new management team, with Paolo Dal Pino – president of the Italian Serie A football league – eventually appointed as chief executive of the business. 

A group of secretive investors then started to accumulate sizeable shareholdings in the company, including Chinese firm Run Liang Tai Management, a company with links to state-backed Chinese technology firms and run by banker Yuxiang Yang.

Other investors that built large stakes in Telit, include Richard Griffiths, the former City stockbroker and well-known small cap investor; Davide Serra, the Italian hedge fund manager that runs investment firm Algebris; and Tang Hao, the Hong Kong-based gaming tycoon. 

Dbay, though, built the largest shareholding – buying just over 26 per cent of Telit and then launched its £305million takeover bid for the chip firm. 

A spokesman for Telit Communications declined to comment last night. 

source: dailymail.co.uk